In a securities filing on Thursday, Bradesco said loans this year could grow between 10 percent and 14 percent, compared with an expansion of 10.8 percent in 2013. The lender had initially predicted growth of 13 percent to 17 percent for 2013, before adjusting its forecast down to between 11 percent and 15 percent.

The forecast underscores growing caution among private-sector lenders, who in recent years have struggled with tough competition from state-run banks, a steep drop in borrowing costs and soaring defaults. Last year, Brazil’s banks extended credit to companies and individuals at the slowest pace since at least 2007, the central bank said this week.

“In spite of the underlying risks to the outlook and the current challenges to sustained growth expansion that the Brazilian economy is faced with in the short run, Bradesco has a positive view on the country,” the filing said.

Some economists are predicting Brazil’s economy will post a fourth consecutive year of anemic growth and persistently high inflation this year, with the October presidential election potentially fanning market turmoil.

Still, Bradesco beat fourth-quarter earnings estimates on the back of a prudent stance on credit, interest rates hikes in the second half of last year and efforts to limit loan loss provisions.

“We expect a neutral market reaction” to the results, Philip Finch, a strategist with UBS Securities in London, wrote in a client note.

STRUCTURAL TRENDS

While banking results for Bradesco’s peers could rise on a sequential basis, structural trends in the sector may continue to hamper revenue. Shares of Bradesco are down 10 percent over the past month, reflecting worries that recent turmoil across emerging markets, a deteriorating economic outlook and political tensions ahead of the election may hamper its performance.

As expected by the poll, defaults fell again, more as a result of the private-sector banks’ risk-off credit approach than to an improving economy.

Loan defaults for 90 days or more fell to 3.5 percent of Bradesco’s loan book in the fourth quarter, the fourth quarterly decline in a row. Disbursements rose 3.6 percent on a sequential basis, the fastest pace of lending expansion in five quarters, the filing said.

Bradesco’s loan book ended the year at 427.27 billion reais, up 10.8 percent on an annual basis and slightly below guidance of 11 percent to 15 percent for 2013.

On a quarterly basis, loan book growth outpaced that of provision expenses, which climbed 2.8 percent. The poll had expected provisions to rise 3.2 percent.

Return on equity, a gauge of profitability that measures how well a bank is using shareholders’ money, fell to 18 percent at the end of the fourth quarter, missing the poll’s estimate of 18.9 percent.

Bradesco’s net interest margin (NIM), the average rate earned on loans, edged higher in the quarter thanks to gains in insurance underwriting and efforts to limit an increase in funding costs, reaching 7.1 percent against 7 percent in the third quarter.

Compared with the fourth quarter of 2012, NIM slipped from 7.3 percent, the filing said.

Management plans to discuss fourth-quarter results at a conference call later on Thursday.